Insight & commentary on local land use and real estate issues

No More Tax Liens For JP Morgan

On July 29, 2011, J.P. Morgan Chase & Co. announced that the firm would begin exiting the tax lien business. Plymouth Park was a New Jersey-based unit of Bear Stearns Cos. Inc., but was doing business as XSPAND and headed by a former New Jersey governor. Plymouth Park was a major purchaser of tax liens throughout the country and one of the largest purchasers of tax liens at the Pima County tax lien sale over the past several years. According to a Bloomberg article, J.P. Morgan claims that the unit is "not central to its operations."

While most of the media outlets were quick to report that J.P. Morgan was shedding its tax lien unit, few have given any analysis as to why. However, according to Bloomberg, Plymouth Park "was among companies that received grand-jury subpoenas in 2009 as part of a U.S. Justice Department antitrust probe of bidding at municipal tax-lien auctions in New Jersey according to an August 2009 prospectus for New York City tax-lien bonds that were serviced by the firm. The Bloomberg article goes on to say: "Antitrust officials investigated whether investors colluded to limit competition on sales to win a higher return, said Vincent Belluscio, executive director of the Tax Collectors & Treasurers Association of New Jersey."

Why exactly J.P. Morgan is exiting the tax lien market may remain unknown to the general public, but others entities have quickly filled J.P. Morgan’s void. Indeed, at the 2011 tax lien sale in Pima County, the same representative that used to bid for J.P. Morgan was believed to be bidding on behalf of Fortress, a large hedge fund.

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